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By Erica Ogg, 11 June 2009 08:31

NEWS

Palm announced Wednesday afternoon that Jon Rubinstein will become the new chairman and CEO of the smartphone maker. Ed Colligan will step down as Palm's chief after 16 years with the company.

Rubinstein joined Palm as executive chairman in October 2007 and will take over as CEO on 12 June. Colligan will take some time off, then join Elevation Partners, the private equity firm that has a 25 per cent stake in Palm.

In a press release issued by Palm, Rubinstein said, "I am very excited about taking on this expanded role at Palm. Ed and I have worked very hard together the past two years, and I'm grateful to him for everything he's done to help set the company up for success."

Colligan's departure means Palm is severing one of the last remaining ties to the company's days as a pioneer of the handheld market. As an early employee of Palm, Colligan left with Donna Dubinsky and Jeff Hawkins to form Handspring and returned when Palm bought Handspring in 2003. Colligan became CEO later, after Todd Bradley resigned in 2005.

Rubinstein is a former Apple executive, and retired as the head of the company's iPod division in 2005. Now, he takes over Palm right as the company begins to mount a comeback in the smartphone category by staking its Pre device directly against Apple's popular iPhone. The Pre was first introduced in January but finally went on sale last Saturday.

Reviews of the Pre have been good, the general consensus being that it's a fine alternative to the iPhone. But while Pre sales have broken records at Sprint, the phone's exclusive carrier, they're low when compared to Apple's initial sales of the iPhone in previous years.

For many industry observers, Rubinstein's appointment was not a surprise.

Analyst Michael Gartenberg said: "This had been a strange [management] relationship for quite a while. It has been clear to most observers that Jon has been calling the shots for quite some time. This just formalises it. It was very clear Palm's investors had brought Rubinstein in to run the company."